BUSINESS leaders have warned vulnerable firms could be left devastated by a reduction in help with their energy bills after the Chancellor said the current scheme was “unsustainably expensive”.

Jeremy Hunt delivered the blunt message in a meeting with industry groups at the Treasury this afternoon, ahead of a statement on a “lower level” of support next week.

The Confederation for British Industry (CBI), Institute of Directors (IoD) and UKHospitality were among those present.

The Treasury said it had protected businesses this winter with an £18billion Energy Bill Relief Scheme that was one of the most generous support deals in Europe. 

However, no Government could “permanently shield businesses from this energy price shock” and Mr Hunt “was clear that this level of support is unsustainably expensive and that the current scheme was always time limited to six months”.

Extending the scheme at its current levels could cost “tens of billions of pounds, with costs potentially doubling or tripling” if international energy prices rose more than expected, and it was “vital that taxpayer’s exposure” to market volatility was reduced.

However Mr Hunt also heard the concerns of those present and explained that any future support, “while at a lower level” would “avoid a cliff edge in support”.

The current energy bill relief scheme, which caps wholesale energy prices on electricity and gas at about half the expected market price for business, ends in March.

The revised scheme is expected to offer help with bills for a further year, until March 2024.

Alex Hall-Chen, of the IOD, said it was a shame the government wasn't targeting support to the parts of the economy most exposed to volatile international energy markets.

“This means that the most vulnerable businesses will lose support at a critical time compared to what they have had this winter.”

British Beer and Pub Association chief executive Emma McClarkin said: “Without extended support at close to current levels, pubs and brewers in communities across the country could be lost for good.

“The failure to safeguard pubs and breweries from price increases come April will be the last straw for businesses who have been struggling for three years to remain solvent and serving their communities.”

Green MSP Ross Greer added: “This will be yet another devastating blow to the many small businesses, charities and public services already suffering from Downing Street’s financial mismanagement and incompetence.

“This is a long, hard winter for far too many small business owners and charities, who are already being hit by soaring inflation and prices. Their recovery must not be pulled from under them by a Tory Government which is actively choosing to put the interests of its rich mates first.

“Small businesses must not be made to pay the price for Tory recklessness. The Chancellor says that the current plan is unsustainably expensive, but we know that he could raise £10 billion a year just from a 1% wealth tax on those with assets of more than £10 million. 

"The UK urgently needs a focus on cutting bills by investing in renewables and building a sustainable and affordable energy system, one that works for people and the planet rather than the fossil fuel giants who have profited so much from the current broken market."